ASX 200 up 38 to 6135 as banks rally. US Futures up 98. A slow burn rally as sentiment to the banks turned around. Some good results today especially from WES and WEB. Special dividends from some including FLT helping sentiment. 23 of the top 200 companies reported today. Positive update from ALL and Married at First Sight helping NEC. Miners took a break from the rises of late with switching to financials and industrials. Jobs data as expected. WOW continues to suffer after results but other defensives enjoying positive vibes. AUD steady at 71.60 after jobs data showed 5% headline numbers.

Todays Highlights

• ASX 200 up 38 to 6135.
• High 6154 Low 6084. Heavy volume on expiry day.
• Banks see rallies as profit-taking hits miners.
• Special dividends helping sentiment.
• WES rewards with 100c special.
• AUD unchanged at 71.60c
• Bitcoin rises to US$3935
• Aussie Gold firms to $1872
• US futures up 98
• Asian markets stronger again with Japan up 0.49% and China up 0.38%.

STOCKS IN FOCUS

• WEB +30.61% analysts caught wrong-footed.
• CVN +13.16% STO comments on Quadrant cheer.
• FPH +7.27% settles patent case with RMD.
• JMS +6.45% dividend announcement brings buyers.
• SDA +4.53% running into results.
• ALL +3.86% AGM update.
• SBM -8.02% golds on the nose.
• PME +5.02% good results.
• NEA -5.06% broker downgrades.
• WTC -5.37% possibly the most expensive large cap stock.
• FMG -4.19% profit-taking.
• APT -2.47% inquiry findings tomorrow.
• CCP -4.69% Senate inquiry pending
• AFG +22.92% MOC +8.51% Labor cooling on upfront payments
• LCK -18.60% rights issue clarification
• CAT +15.32% good results in Elite sports division.
• Z1P +8.17% good results but caution.
• BYE +4.76% drilling results to come.
• SYR +6.00% bottom fishing.
• TLS +0.62% new Samsung foldable.
• GZL +39.91% scheme of arrangement with PVH.
• Speculative stock of the day: Nothing significant.
• Biggest Risers – WEB, CVN, FPH, NEC, LIC, WES and PTM
• Biggest Fallers – SBM, SAR, EVT, WTC, MIN and NEA.

TODAY

• Aristocrat (ALL) +3.86% Trading update. Tracking in line with company plans. FY19 earnings expected to be skewed to second half reflecting timing of digital game releases. Incremental gains in attractive North American adjacencies. Further growth in Digital bookings supported by new game releases. Suspect the market will have wanted more on detailed numbers.
• MYOB Group (MYO) –0.88% Full year underlying NPAT came in at $103.6m vs consensus of $95.5m. Revenue and underlying EBITDA fell just short of estimates at $445.2m and $189.6m respectively. MYO expects revenue growth in FY19 of between 6% to 8% vs prior guidance of ‘high single-digit growth’.
• Sydney Airport (SYD) +1.73% Qantas CEO Alan Joyce has said he prepared to fight for passenger rights against ‘monopolistic airports’ with ‘unreasonable car park charges’. Watch out SYD.
• Resmed (RMD) +0.43% announced an agreement to settle all outstanding patent infringement disputes between itself and FPH in all venues around the world. The settlement involves no payment or admission of liability by either side. As a result of the settlement, there will be no further infringement proceedings against ResMed products. Good result for RMD. We hold this one for clients.
• Catapult Group (CAT) +15.32% First half NPAT came in at ($9.3m) vs consensus of ($9.5m). EBITDA beat at ($1.4m) vs expectations of ($2.7m). CAT said it is on track to deliver FY19 guidance objectives, and notes it historically observes stronger revenue and EBITDA contribution in the second half.
• Zip Co (Z1P) +8.17% Revenue up 114% to $34.23m from $15.975m Loss down 54% to $6.78m. The reported arrears rate were 1.40% at 31 December 2018. Group increased customer numbers from 738,000 to over 1m, while the number of merchants accepting Zip increased from 10,500 to over 12,600. Pocketbook has maintained its position increasing its user base to over 600,000. An increase in transaction volume from $235.3m for the six months ending 31 December 2017 to $495.2m for the six months ending 31 December 2018. Outlook: Target of $1bn in annual transaction revenue. 1m customers. Fingers crossed. Interestingly ASIC have launched an investigation of the price moves of FXL, Z1P and APT yesterday as they all fell heavily. Friday is crunch day for the report from the Senate Committee. Some suspicion that the report has leaked.
• Mineral Resources (MIN) –5.18% Market doesn’t like the numbers, with the share price down almost 8%. Underlying NPAT down sharply from a year ago; $34.4m versus $92m. Revenue also down sharply; $554.7m vs $926m. Remains on track to deliver the forecast EBITDA of between $280-320m.
• Iluka Resources (ILU) –1.46% Full year underlying NPAT came in at $300.7m, below consensus of $304.9m. Revenue fell short of expectations at $1.24bn. Underlying EBITDA beat at $600.1m vs consensus of $580.7m. A final dividend of 19cps has been declared, bringing the full year payout to 29cps. ILU expects production to be completely sold in 2019 and anticipates sales to be in line with production.
• Alumina (AWC) –2.21% Full year result. Alumina reported a US$635m profit after tax and a US14.1c dividend. AWC has received or is due to receive US$193.6m. EBITDA increased by US$1,013.2m to US$2,630.1m. Margin for alumina refineries increased by US$84 per tonne to US$221 per tonne • Net cash inflows increased by US$766.6m to US$1,804.4m. The alumina price has averaged US$380 per tonne since 1 January 2019 which delivers a significant margin for AWAC’s low-cost assets.
• Santos (STO) +0.43% Full year profit of a record $727m and record cash flow of $1.006bn. Final dividend of US6.2c. Total for the year of US9.7c. The recent completion of the acquisition of Quadrant Energy will provide a significant boost in Santos’ production in 2019, with the company targeting production of between 71 and 78 mmboe. Strong reserves growth in 2018 with 2P reserves increasing by 20% to over 1bn barrels of oil equivalent. Contingent resources increased to 1.8bn barrels.
• Perpetual (PPT) +3.10% Underlying NPAT of $60.2m v $62.1m forecast down 12.1%. Operating revenue down slightly to $252.3m and a 125c dividend, down 7%. Challenging times at PPT. Perpetual Investments’ profit before tax (PBT) was $46.5m, which was $11.6m or 20% lower compared to 1H18. Perpetual Private’s profit before tax was $22.6m, 2% lower than 1H18. One good point was Perpetual Corporate Trust’s profit before tax was $22.4m which was $2.6m or 13% higher than 1H18. The result was driven by sustained market activity within commercial property.
• Nine Entertainment (NEC) +7.17% H1 NPAT A$108.5m ex-items vs year-ago A$116.2m . Revenue, ex items $714.2m vs year-ago $723.9m. Dividend 5c. Stan recorded a very strong period for sign-ups, with active subscribers now of c1.5m. Revenue growth of 50%, and a cost increase of 19% again highlights the leverage of this business. Net Debt was $228m, on a wholly-owned basis. Nine has increased its FTA share and expects to grow year on year revenue in the quarter by approximately 3%. Digital and Publishing is expected to continue to grow through H2 FY19 and into FY20. Stan expects to be profitable in Q4 FY19, and report a positive contribution to EBITDA in FY20. Positive outlook statement. Nine is expecting to report Pro Forma Group EBITDA on a continuing business basis of at least $420m, which equates to growth of at least 10% on the FY18 like-basis result of $385m.
• Glencore, the biggest coal producer in Australia has decided to cap coal production at current levels. The company has spent US$2.7bn in the last two years acquiring coal assets but will now shift its focus to other metals like copper, nickel and platinum. Glencore owns 14 coal operations in Australia and production this year is expected to grow by nearly 20% to hit 104m tonnes.

ECONOMIC NEWS

• Jobless rate unchanged at 5% in January, the same as the prior month and in line with market estimates. The economy added 39,100 jobs while the number of unemployed lifted 6,600.

• Average weekly earnings up 2.4% over the year to November in trend terms. Total earnings +2.8%.

• The participation rate moved up 0.1 points from a month earlier to 65.7%, slightly above forecasts of 65.6%. The employment to population ratio went up 0.1 percentage points to 62.4%.
• High profile economist , Bill Evans from WBC has now changed his interest rate forecast for two cuts in 2019 . One in August and one in November. Unemployment to rise to 5.5% as growth slows.
• Julie Bishop announced she is quitting politics at the next election. Not unexpected.

BOND MARKETS

• 2-Year bond yields unchanged at 1.70%
• 5-Year yields fall 1bps to 1.71%
• 10-Year yields fall 1bps to 2.08%

ASIAN NEWS

• US and China are apparently working on multiple trade memorandums.

EUROPEAN AND US NEWS

• Standard and Chartered have set aside US$900m for fines in UK and US.
• The UK faces a potential credit rating downgrade because of the mounting risk that it will leave the EU without a transition deal.
• Samsung revealed its first foldable smartphone on Wednesday in San Francisco.
• VW has warned that a US car tariff could cost EUR2.5bn in a worst-case scenario.
• Tesla loses its top lawyer after only two months.
• UBS has to pay EUR 4.5bn in penalties for avoiding French taxes. Thought everyone did that in France.
• More Tory MPs expected to defect to the new Anti-Brexit party.

And finally……………..

One day little Johnny was digging a hole in his back yard.

The next-door neighbor spotted him and decided to investigate. “Hello Johnny, what are you up to?” he asked.

“My goldfish died and I’m gonna bury him,” Johnny replied.

“That’s a really big hole for a goldfish, isn’t it?” asked the neighbor. “That’s because he’s inside your cat!”

 

 

A man flying in a hot air balloon suddenly realises he’s lost.

He reduces height and spots a man down below. He lowers the balloon further and shouts to get directions, “Excuse me, can you tell me where I am?”

The man below says: “Yes. You’re in a hot air balloon, hovering 30 feet above this field.”

“You must work in Information Technology,” says the balloonist. “I do” replies the man.

“How did you know?” “Well,” says the balloonist, “everything you have told me is technically correct, but It’s of no use to anyone.”

The man below replies, “You must work in management.” “I do,” replies the balloonist, “But how’d you know?”

“Well”, says the man, “you don’t know where you are or where you’re going, but you expect me to be able to help. You’re in the same position you were before we met, but now it’s my fault.”

Clarence

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